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What Medicaid cuts might look like

Obama may approve Medicaid cuts in a compromise with Republicans. | AP Photo

Nailing down a savings target for the population has been tough, though. The Simpson-Bowles deficit plan recommended giving Medicaid full responsibility for dual eligibles and requiring that they be placed in managed care programs. It estimated the move would save $12 billion, but patient advocates are skeptical about letting managed care plans be responsible for a population with such demanding care needs.

Last summer’s deficit group, led by House Majority Leader Eric Cantor and Vice President Joe Biden, identified up to $5 billion in savings for “dual eligible care coordination,” but the plan didn’t offer many details beyond that.

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Competitive bidding for medical equipment: $5 billion

Medicare has already started a competitive bidding program for durable medical equipment that’s projected to save the program $17 billion, and a couple of previous deficit plans would have extended the program to Medicaid.

But the medical equipment providers and home health advocates hate the Medicare bidding program — they say it limits patient access to equipment providers and will drive out small firms that can’t compete against the bigger ones in a bidding process.

There’s bipartisan support for the program’s repeal, but it doesn’t seem as though the Medicare bidding program is going anywhere. It’s set to expand from nine cities to an additional 91 metro areas, and it provides budget savings.

The White House said extending the program to Medicaid would save $4.2 billion, while the Biden-Cantor group pegged the savings at $5 billion.

More flexibility: TBD

It’s unanimous — states should have more Medicaid flexibility. But what that means and the amount of actual savings it could provide are a bit nebulous.

Simpson-Bowles, Biden-Cantor, and the White House deficit plan all called for states to enjoy greater flexibility. Simpson-Bowles specifically recommended making state Medicaid waivers more available under certain conditions around quality and enrollment levels. The White House proposal would let states decide whether to mandate “benchmark” benefit plan coverage for optional Medicaid populations earning more than 133 percent of the federal poverty level.

The trick, though, is scoring the savings. Take it from the Biden-Cantor group, which called for “Medicaid flexibility” in its outline. Projected savings: “??”